State Legislature wants to “help people… get into a home.”

As 2008 gets rolling, your lawmakers are getting back to the business of budgets and lawmaking in Olympia. Of course, with this being an election year you can expect to hear a lot of talk about “doing something” to address the latest hot issues that are on everyone’s mind.

So what is one of the biggest issues they intend to “do something” about this year? You guessed it… the “housing crisis.”

Legislative leaders tried to keep expectations to a minimum this week as they prepared to convene Monday for the 2008 session.
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A good portion of their energy will go toward responding to big events from 2007: fallout from the housing crisis…
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Sen. Majority Leader Lisa Brown, D-Spokane, said her caucus has prepared a package of housing and home security bills and plans to begin working on them in the first weeks of the session.

“There have been a lot of successes in our state, the economy has been strong, unemployment rates have been low, but people are starting to feel an sense of uncertainty,” Brown said.

Awesome. So like we all already knew, our state is special and strong and all that, but our legislators are going to work hard to pass laws and spend our tax money to address “feelings.”

“They are feeling a sense of political uncertainty, they don’t know what will happen in the coming year. They are feeling a sense of economic uncertainty as they hear bad news and when they look at their own bottom line, things can be deteriorating.”

Oh. I guess it’s not just feelings, but actual financial hard times, even for people in our own special corner of the country. But I thought we were immune.

House Speaker Frank Chopp, D-Seattle, agreed that the state needed to address housing security.

“There is nothing that comes closer to the American family than their home,” he said. “We’ve got to help people … to get that leg up in order to get into a home, and to help them through the difficult times.”
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“Our goal is to help people with those very basic checkbook issues that they are struggling with or are concerned about … immediately,” Brown said.

Can someone please explain why it should be the government’s responsibility to help people own a home, or to deal with “basic checkbook issues” when they have frittered away their money and their home equity on plasma TVs and SUVs? I’m just not feeling it here. Seems to me that people should be responsible for their own “checkbook issues.”

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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

35 comments:

Pandering, pure and simple. What the heck do they want to do, try to prop up today’s unsustainable prices?
“Check book issues”, meaning people don’t make enough $ by and large, to afford $400-500K homes? Bankers must be ringing their phones off the hook.

Why do politicians want us to own homes?
I may be wrong, but the perception, accurate or not, is that homeowners are more involved in what happens in their communities, work hard to keep their properties up, and are more inclined to vote for things like school levies.
The old image is that renters don’t care, are not committed to improving the neighborhood since they won’t stay there that long.
Here’s my disagreement with you on this, The Tim:
You seem to be blaming ” the victim” on this, that homeowners who are going into foreclosure have created their own problems by not being aware enough and frittering away money they never had…I see that but unscrupulous lenders and real estate agents had a big part in putting people into homes they couldn’t afford.

Ira, I agree that lenders and agents have their own share of the blame as well. However, the ultimate decision to proceed with a dangerous loan lies with the person whose signature was placed on the dotted line. Nobody put a gun to the heads of these home “owners” that are now in peril, forcing them to take on a loan that they ultimately would not be able to afford.

I say tighten the screws on the lenders and RE industry, but don’t bail out people that made poor financial decisions.

Can someone please explain why it should be the government’s responsibility to help people own a home, or to deal with “basic checkbook issues” when they have frittered away their money and their home equity on plasma TVs and SUVs?…..

It isn’t the government’s responsibility, but election time is approaching……

I’m just waiting to see how long Washington will tolerate lower construction rates until they streamline and make easier the permit process.

In my opinion, the county has deliberately made it very difficult to obtain a building permit. Since Seattle is “special” people have been willing to put up with the red tape in order to live here.

But now that construction is slowing down and housing prices are falling, will King County & Company continue to make it difficult to build a house? Or will they streamline the process in order to encourage more construction spending?

I’m just waiting to see how long Washington will tolerate lower construction rates until they streamline and make easier the permit process.

In my opinion, the county has deliberately made it very difficult to obtain a building permit. Since Seattle is “special” people have been willing to put up with the red tape in order to live here.

But now that construction is slowing down and housing prices are falling, will King County & Company continue to make it difficult to build a house? Or will they streamline the process in order to encourage more construction spending?

Even though it would not do much for existing mortgage holders, not fighting a natural return to sane prices would be the best thing the state could do to “help people get into a home.” Beyond the market, I am curious what the emotional response will be if people start receiving decreased value notices from their assessor in the future, or if the assessments mechanism can actually subtract rather than add. The state is another entity aside from the RE industry that benefits from endless appreciation.

….Beyond the market, I am curious what the emotional response will be if people start receiving decreased value notices from their assessor in the future, or if the assessments mechanism can actually subtract rather than add. The state is another entity aside from the RE industry that benefits from endless appreciation.

B&W Nikes – I too am very interested in how county assessment values will change. Has anyone ever seen assessment values go down?

You seem to be blaming ” the victim” on this, that homeowners who are going into foreclosure have created their own problems by not being aware enough and frittering away money they never had…I see that but unscrupulous lenders and real estate agents had a big part in putting people into homes they couldn’t afford.

IMO, the real victims of this are financially prudent middle income people who can no longer afford property in Seattle. None of your “victims” ever heeded common sense phrases like “There’s no such thing as a free lunch” or “If it sounds too good to be true, it probably is”.

Even though it would not do much for existing mortgage holders, not fighting a natural return to sane prices would be the best thing the state could do to “help people get into a home.”

I doubt the folks in Olympia grasp this. Everything I hear is about saving people that outspent their means or helping people buy a house, whether they have the means or not. The former is a nightmare from a taxation standpoint, the latter would be best served by just allowing the downward pressure do its thing without the government stepping in. And in fact, trying to save people in foreclosure will merely hinder efforts to help other people afford homes.

But now that construction is slowing down and housing prices are falling, will King County & Company continue to make it difficult to build a house? Or will they streamline the process in order to encourage more construction spending?

If they make it easier to build houses, more houses will be built and prices will fall even more.

A) It’s an election year.
B) Anyone that sat through a closing and loan processing knows how intimidating the process is. Plus, you sign a ton of papers type with Font size 2. And, in many cases lenders changed the terms on people.
C) Don’t get me wrong. I want prices to come down to where they should be. Where middle class families can afford them. ($150K-$300K)

Buceri has a point. Buying a home can be a scary process, and a lot of folks who bought didn’t do it out of a sense of greed ( well, some of em) but because they were being bombarded with the media’s ” Buy now before it’s too late” and that loans were available with zero down, and that home ownership is the way to build equity: people bought houses because they thought they were supposed to, and if they had doubts, they turned to real estate agents and lenders who had their own agendas.
I know we’re supposed to refrain from talking politics here, and I’ll try, but I think we’re simply talking differences in political philosophy:
The Tim seems to have a libertarian bent where people need to take responsibility for their actions and pay the consequences if they make mistakes, and I believe that if people were misled, cajoled, lied to,and led to ruin as a result, government does have a role to play in helping them out. How, I’m not sure. I sure as hell wouldn’t subsidize lenders, reward them for their misdeeds.

I don’t think that holding people accountable for their actions falls under any given political ideology – it seems pretty universal to me. If people were “misled, cajoled, lied to, and led to ruin as a result” then they should live with the consequences of their poor judgement.

Nobody is going to bail me out, nor have any pity for me, if I “buy” a brand new car and finance it over 7 years at 20% interest. People do this everyday!

If people were lied to or misled, they can seek remedy by suing those folks and if they are able to win they can also convince a prosecutor or two to put the people in jail. The government stepping in to hand out checks only gives remedy to those who were somehow defrauded but unable to provide proof they were defrauded. I think that class of home buyers is likely so small that it is not worth the moral hazard of rewarding those who actually were bad actors with government dollars. If there is no proof, then there is no difference between “I was misled” and “I want my check” as far as home buyers in the last several years would be concerned. In car buying we have a 72 hour “cooling off” period, in home buying that similar period is weeks and sometimes months to close. And unlike that, you have plenty of time to consult with attorneys and verify contracts, etc. The current laws and remedies we have seemed to work fine in the pre-2004 world, the only thing that has changed is that people are losing money and sad about it.

“I know we’re supposed to refrain from talking politics here, and I’ll try, but I think we’re simply talking differences in political philosophy:
The Tim seems to have a libertarian bent where people need to take responsibility for their actions and pay the consequences if they make mistakes, and I believe that if people were misled, cajoled, lied to,and led to ruin as a result, government does have a role to play in helping them out.”

… Maybe the government should step in and punish the tricksters and make THEM pay for tricking these gullible fools, but I refuse to believe the fools are ALL that gullible. I don’t think I should pay because some people were tricked.

Washington, like California, is going to have to deal with the fact that less revenue is going to be generated based on housing (property taxes, employment taxes, etc.). Politicians love spending money based on projections that tend not to be too conservative. I think the future holds higher taxes or fewer services and conveniences (see the plans for tolls on the 520 and 90). California got too pricey because it was special and everyone wanted to live there. Now Washington is suffering from the same “issue”. California is starting to see native net losses in population due to migration. Washington may be just around the corner. Maybe Oregon will become the new Washington as the rest of the West Coast is taken up now.

You are right, there is no cooling offer period for cars in WA! There there is for some other types of purchases, and apparently cars are covered in other states. Good thing I’ve never needed it as I do not rush into large purchases. Anyway, the point still stands that you have plenty of time to go over a purchase of a home (or car) and if you make an unwise decision there is no reason to protect you.

i agree, anybody who commits to $X00,000 dollars worth of debt without reading the paperwork or paying somebody else to read the paperwork or seeking unbiased advice should be held to their commitments, no matter how sleazy the loan salesperson was.

I think the RE community needs to understand that the RE Bubble is the SAME as the .com bubble: fueled purely by emotion, greed, and has had its winners and will have its losers. Sure some folks may lose their homes, but they can always rent. Many folks lost their entire stock porfolio or much of their 401K in the .com days.

And to continue the soap box diatribe, I never understood the I want the value of my house to go up, the quality of public services I receive to increase, but not pay any more taxes?!?!?

“The Tim seems to have a libertarian bent where people need to take responsibility for their actions and pay the consequences if they make mistakes, and I believe that if people were misled, cajoled, lied to,and led to ruin as a result, government does have a role to play in helping them out.”

The majority of people that got in over their heads are feckless idiots and I wouldn’t give them so much as a crumb of bread. The loan documents they signed could have been reviewed by an attorney and explained if there were questions. I believe these people should pay back every cent they borrowed even if it means working three jobs. It’s about time people take responsibility for their own actions. And BTW, I am not a neo-conservative, right-wing libertarian.

Our Gov’nor and State Legislature will do anything and everything to keep lining the pockets of those who contribute the most to their campaigns. Not a fair world for the majority of tax payers whose money will be stolen errr… allocated to fund these wonderful projects designed to reward a select few.

Here is something to think about. Several states(Florida is the best example) have already put in place emergency programs because the money they manage has been severely impacted by mortgage investments. King County has fessed up with some of their severe problems but the State of Washington has not. There are many pensions and investments that may have been destroyed in the last four months. Are they hiding the loses and hoping to be bailed out or have they truly dodged the bullet that is traveling across this great country and destroying everything in its way. King Co. mismanaged their funds and I have no information that the state did not. Who knows that will actually go on record and tell us? My feeble attempts have been shelved but since even money market funds that everyone thought were safe are now at risk, this would be a good next topic to discuss here next as it involves all of us in this state.
Who knows you might even expose some frauds and win a Pulitzer for investigative reporting.

The government should compensate those who waited to buy because they believed the bubble was being fueled by crazy/speculative lenders and buyers. I think 10 percent of current median SFH prices sounds fair.

Yes, people should pay what they owe, however, there has been a lot of larceny going on the past five years. Bad construction, uneducated REALTORs, untrained Loan Originators, and the internet Real Estate business models, all contributed to an undisclosed consumer the risks of Real Estate speculation.
I’m not talking about the people who did research and bought the family home at a fair price, it’s the scoundrel fringe of Real Estate that had it’s day in the sun. Every low life loser scum came into our business to steal what they could then packed up. Should we pay for it, hell no.
Real Estate is a commodity that self regulates. Prices go and down. There are bargains being made today for saavy investors. The problem is people got hurt, and continue to be hurt. Our obligation is to do what you are doing here, telling people the truth and letting chips fall where they may.

“i wonder if the state shouldn’t be discussing ways to help people get out of houses they cannot afford, instead of ways to get into houses?”

Exactly. Easing the transition *down* to lower prices is the best thing we can do in this situation. It’s going to happen anyway, so it’s better to get it done with quickly and as painlessly as possible.